[HISTORY: Adopted by the Borough Council of the Borough of
Florham Park 12-12-2019 by Ord. No. 19-17; amended in its entirety 10-22-2020 by Ord. No.
20-16. Amendments noted where applicable.]
There is hereby established a partially self-funded health insurance
plan for Borough employees and retirees to be known as the "Borough
of Florham Park Self-Funded Health Plan" (the "Plan"). There is further
established in accordance with the provisions of N.J.S.A. 40A:10-6
et seq. an insurance fund to be known as the "Borough of Florham Park
Self-Insurance Fund" (the "Fund"). The Plan and the Fund shall be
operated and maintained in accordance with the terms of this chapter,
N.J.S.A. 40A:10-6 et seq., and the rules and regulations promulgated
thereunder by the Department of Community Affairs.
There is hereby established in accordance with the requirements
of N.J.SA. 40A:10-8 a Fund Commission (the "Commission") consisting
of the Mayor and two Borough Councilmen or Councilwomen together with
a Secretary of the Commission to be appointed by the governing body.
The Commissioners shall hold office for two years or for the remainder
of their term as officials, whichever is less, and until their successors
shall have been duly appointed and qualified. The Commissioners shall
serve without compensation. The compensation of the Secretary, if
any, shall be established and authorized by the governing body. Vacancies
occurring on the Commission shall be filled for the unexpired term.
The Commissioners shall forthwith after appointment organize for the
ensuing year by electing a chairperson from among their membership.
In order to maintain the efficient, professional and actuarially
sound operation of the fund, the Borough will contract with a qualified
third-party administrator (the "TPA") to assist the Borough and the
Commission in the proper design and administration of the Plan. Subject
to consultation and review by the governing body, the Commissioners
shall have the power and duty to oversee the TPA, adopt rules and
for the control and investment of the Fund, assure the Fund has sufficient
funds for the payment of and claims, invest assets of the Fund in
accordance with the Borough's established investment policy,
and assure the operation of the Plan and the Fund consistent with
their purpose.
The purpose of the Fund is to hold, manage and distribute, in
accordance with the Plan documents and sound fiscal management, money
necessary to pay the valid claims of Borough employees and retirees
as required to fulfill the obligations of the Borough pursuant to
the Plan and its health insurance obligations to its employees and
retirees. The Fund exists to pay healthcare claims and related expenses
covered by the Plan and the Fund shall not be used for any other purpose.
The Commissioners and the TPA shall cause the Fund to achieve
a reasonable reserve of up to six months of claims payments to assure
that sufficient assets are available to continue to pay all claims
and expenses in a high claim year.
Claims shall be administered and paid, after review, by the
TPA in accordance with the TPA administration contract. The TPA shall
assure that all Borough employees and retirees covered by the Plan
are fully informed as to the proper procedure for submitting claims
and that all notices required by law with respect to the Plan are
promptly provided to the plan participants.
The Borough, directly or through the TPA, shall arrange for
the purchase of "stop loss" or "excess" coverage in order to provide
ascertainable limits to the liability of the Fund. Such coverage shall
include, but need not be limited to, coverage for catastrophic illness
for Plan participants, aggregate coverage (below catastrophic coverage)
to assure that the Plan's risk level is capped at a maximum amount
as established by the Borough in consultation with the Commissioners
and the TPA, and runout coverage (also referred to as a "12/15 contract")
to allow claims incurred during the plan year to be paid out for a
period of three months after the end of the plan year.
The TPA shall, in the first instance, review appeals from denial
of claims. In considering appeals, any relevant supplemental information
provided by the Plan participant or the service provider shall be
considered. A third party retained to review appeals on an independent
basis according to the Plan documents shall handle second-level appeals.
In order to assure that the Plan is consistently, fairly and equitably
administered, no member of the governing body shall be involved in
the approval or denial of claims, which in all cases shall be determined
by the terms of the Plan.
The Commission shall annually, in consultation with the governing
body and coordination with its TPA and other professional consultants,
shall review and evaluate the Plan and shall evaluate the Plan in
comparison to a fully insured plan. The base plan option of the Borough's
Plan shall be modified to mirror the design of the fully insured equivalent
plan. This review shall occur at the same time as the annual open
enrollment period. At no time will the Borough be required to offer
a base plan benefits greater than those offered by the fully insured
equivalent plan do.
